Montgomery County to assess additional penalty in delinquent tax collection

Tony Fioriglio of the Times Herald reports:

NORRISTOWN — The Montgomery County Commissioners approved a resolution modifying the way that delinquent taxes will be collected, which will essentially place the burden of collection costs on the delinquent taxpayer rather than the body that is owed the money.

According to County Treasurer Jason Salus, The Tax Claim Bureau collects delinquent taxes for the county, municipalities, and school districts under state law. However, over the course of approximately eight years, some taxing authorities, mostly school districts in the county, used outside agencies to collect any delinquent taxes. By doing so, the county did not collect a five percent fee that, under state law, was owed to it.

“In a practice developed over a period of years, some taxing authorities elected not to use the county tax claim bureau and had an impression that they were not responsible or liable for paying to the county 5 percent,” Salus explained during the meeting. “That is inconsistent with the law.”

However, after thorough investigation, the Treasurer’s Department was unable to find any waivers that would allow those taxing authorities that used third-party agencies to forego paying the county the 5 percent that is owed.

“From 2004 until today, some eight years, we were entitled to five percent of these fees that were generated even from these third party collectors and we didn’t get them?” Commissioner Bruce Castor asked, which Salus confirmed.

In order to alleviate any potential confusion, the new resolution will now allow levy what is essentially a 5 percent penalty to delinquent taxpayers. The additional 5 percent accrued will go to the county, while the taxing authority that is owed the back taxes will still receive the full 100 percent that is owed.

Salus went on to offer a conservative estimate that the county lost out on more than $4 million as a result of the discrepancy between the county and multiple school districts. Under the new resolution, which will assure that the county will get all required fees, an approximate amount $750,000 per year in revenue could come to the county. The annual amount will vary year to year, depending on the amount of delinquent taxes collected.

The resolution will take effect on Jan. 1, 2013 and, because of a desire not to cause tax increases, the commissioners, on the recommendation of the Treasurer’s Department, decided not to pursue legal action to collect the fees owed.

The commissioners also hope that the additional 5 percent fee will serve as a deterrent for those that may consider not paying taxes.

“If people realize that there is a 5 percent penalty by not paying, maybe we will collect more sooner,” Castor said.

Read the entire story here.